8-K: SSR Mining Unveils Multi-Year Guidance, Projects 800,000 Ounces Production by 2027

SSR Mining announces multi-year guidance and technical reports for all operating assets, projecting production growth approaching 800,000 ounces by 2027 and AISC trending towards $1,300 per ounce.

Summary

• SSR Mining has released a comprehensive business update, including multi-year production guidance and technical reports for all operating assets.
• The company projects production growth approaching 800,000 gold equivalent ounces by 2027, with a compound annual growth rate (CAGR) of 10%.
• All-in sustaining costs (AISC) are expected to trend towards $1,300 per ounce by 2027.
• The company anticipates positive free cash flow in 2024, building on an existing $1 billion liquidity position.
• Hod Maden is on track for a positive construction decision by mid-2024, with an expected project IRR of +30%.
• Technical Report Summaries (TRS) for all operating assets show a combined net asset value of greater than $3 billion based on Mineral Reserves only, or approximately US$15 per share at consensus commodity prices, increasing to greater than $4 billion, or approximately US$20 per share at spot commodity prices.
• Total life of mine production increases over prior technical reports by 7% and 23% respectively, before and after the inclusion of Hod Maden.
• More than 85% of consolidated life of mine production is expected to be in the bottom half of the industry cost curve.
• The pler technical report shows a net asset value of $1.64 billion based on Mineral Reserves only, with average annual production of 281,000 ounces of gold at an average cost of sales of $965 per ounce and AISC of $1,003 per ounce over 15 years.
• pler gold production is expected to increase to nearly 400,000 ounces annually by 2027, a 23% CAGR.
• The pler technical report includes a +30% IRR grind-leach circuit installation for initial capital of $194 million.
• The Marigold technical report shows a net asset value of $800 million based on Mineral Reserves only, with average annual production of 212,000 ounces of gold at an average cost of sales of $1,065 per ounce and AISC of $1,213 per ounce over 9 years.
• Marigold production is expected to exceed 300,000 ounces in annual production by 2029, a 13% CAGR.
• Consolidated Mineral Reserves, on an attributable basis, are nearly 8 million gold equivalent ounces, and including attributable 40% of Hod Maden, Mineral Reserves exceed 9 million gold equivalent ounces.
• The portfolio weighted average mine life based on Mineral Reserves is at least 14 years.
• C2 Mineral Resources were removed following completion of technical work resulting in a $349 million non-cash impact to pler mineral properties and fixed assets value from ~$2.80 billion to ~$2.45 billion.
• akmaktepe Mineral Reserves increased 75% to 3 million ounces gold.

Sentiment

Score: 8

Explanation: The document is highly positive, highlighting significant production growth, cost improvements, and strong financial performance. The company's commitment to capital returns and a long mine life further enhance the positive outlook.

Positives

• The company has a strong liquidity position of nearly $1 billion.
• The company has a commitment to capital returns, including a quarterly cash dividend.
• The company has a weighted average mine life of at least 14 years.
• The company has a production growth trajectory driven by two high-returning projects.
• The company has a track record of operational consistency and project execution.

Negatives

• The company expects to record a $349 million non-cash write down, adjusting its fixed asset and mineral property value from approximately $2.80 billion to $2.45 billion in its full-year 2023 results due to the removal of Mineral Resources associated with C2 at pler.

Risks

• The company is subject to various risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.
• Many of these risks and uncertainties cannot be controlled or predicted.

Future Outlook

SSR Mining expects production and margins to remain stable through 2026, with significant production growth towards 800,000 gold equivalent ounces and AISC trending towards $1,300 per ounce by 2027.

Management Comments

• Rod Antal, Executive Chairman of SSR Mining, said, We are pleased with the strong results in the fourth quarter of 2023, successfully delivering on our commitment to produce more than 400,000 gold equivalent ounces in the second half of the year and generating more than $335 million in operating cash flow and $235 million in free cash flow over the same period.
• Rod Antal, Executive Chairman of SSR Mining, said, Our business has now delivered on its production guidance targets for 11 of the last 12 years, reinforcing our reputation as strong and consistent operators.
• Rod Antal, Executive Chairman of SSR Mining, said, This year, we are presenting an extended production guidance outlook, showcasing a strong growth profile approaching 800,000 gold equivalent ounces at AISC trending towards $1,300 per ounce by 2027.
• Rod Antal, Executive Chairman of SSR Mining, said, This outlook is the culmination of significant technical work and asset optimization efforts across the portfolio, including a nearly 75% increase in Mineral Reserves from akmaktepe.
• Rod Antal, Executive Chairman of SSR Mining, said, The combination of the increase in Mineral Reserves at akmaktepe and the concurrent investment in a Grind-Leach Circuit to improve gold recoveries is expected to deliver a doubling of life of mine production from akmaktepe, providing a more than 30% expected internal rate of return on our investment.
• Rod Antal, Executive Chairman of SSR Mining, said, Overall, as weve optimized our mine plans across the portfolio, we have seen a 7% increase in gold equivalent production as compared to prior life of mine totals, or more than 20% inclusive of Hod Maden.
• Rod Antal, Executive Chairman of SSR Mining, said, This company-wide technical work sets a refreshed and positive baseline for our business, with steady production in the near-term and meaningful growth and free cash flow over the five-year period.
• Rod Antal, Executive Chairman of SSR Mining, said, Our anticipated growth capital expenditures over the next three years are supported by our current liquidity position of nearly $1 billion, our ongoing operating cash flow, and our efforts to finance Hod Maden through a $200 to $300 million project finance facility.
• Rod Antal, Executive Chairman of SSR Mining, said, Our strong financial position indicates that we will exit this growth cycle with a solid balance sheet while still maintaining our commitment to capital returns. This includes our quarterly cash dividend, which underpins our baseline commitment to capital returns and currently yields nearly 3% annually. In addition, we will continue to supplement these baseline returns through additional share buybacks.
• Rod Antal, Executive Chairman of SSR Mining, said, With a weighted average mine life of at least 14 years, a production growth trajectory driven by two of the highest returning projects in the industry, a wealth of additional organic growth opportunities and a continued commitment to capital returns, our business begins 2024 in an enviable position.
• Rod Antal, Executive Chairman of SSR Mining, said, We look forward to continuing to deliver on our track record of operational consistency, project execution and value accretive strategic initiatives in the years to come.

Industry Context

The announcement reflects a trend in the mining industry towards optimizing existing assets and focusing on high-return projects to drive growth and improve profitability.

Comparison to Industry Standards

• The projected AISC of $1,300 per ounce by 2027 is competitive within the gold mining industry, placing SSR Mining in the bottom half of the industry cost curve.
• The projected IRR of +30% for the Grind-Leach Circuit and Hod Maden projects are considered high for the mining industry.
• The weighted average mine life of at least 14 years is considered long for the mining industry.
• The company's commitment to capital returns, including a quarterly cash dividend, is consistent with industry standards for shareholder value.

Stakeholder Impact

• Shareholders will benefit from increased production, improved profitability, and continued capital returns.
• Employees will benefit from a stable and growing company with a long mine life.
• Local communities will benefit from continued employment opportunities and community investment programs.

Next Steps

• The company will continue to advance exploration and resource development activities at each of its assets.
• The company will continue to evaluate opportunities to extend the Puna life of mine through Mineral Reserve conversion at Chinchillas, as well as the definition of initial Mineral Reserves at the Cortaderas target.
• The company will continue to evaluate opportunities to extend the Marigold mine life through Mineral Reserve conversion and growth at Buffalo Valley, Mackay, Valmy and New Millennium.
• The company will continue to evaluate opportunities to extend the Seabee mine life through Mineral Reserve conversion and growth at Santoy 8, 9 and the Gap and Santoy Hangingwall targets, as well as the Porky and Porky West targets.
• The company will continue to advance technical work at Hod Maden ahead of a construction decision and accompanying project financing package.

Key Dates

Keywords

SSR Mining, multi-year guidance, technical reports, production growth, AISC, free cash flow, Hod Maden, Mineral Reserves, Mineral Resources, pler, Marigold, akmaktepe, Grind-Leach Circuit, Seabee, Puna